Tesco is introducing direct contracts for pig and beef farmers as it launches new dedicated producer groups for the two sectors.
The move is part of a £25m investment and will see farmers receive a premium above the market price and have their prices linked to the cost of production in a similar way to Tesco’s existing arrangements with dairy farmers through its Tesco Sustainable Dairy Group.
The new Tesco Sustainable Farming Groups would be run by farmer committees and contracts would be for a duration of up to 36 months, following feedback from farmers, which had highlighted a desire for longer-term agreements, Tesco said.
On the pork side, Tesco will work with 140 farmers who supply the majority of its fresh own-label pork. Prices will be reviewed on a monthly basis and will be linked to the cost of feed, addressing a key concern for pig farmers who have been struggling amid soaring grains prices. “Pig farmers have been under pressure with significant rises in feed prices, so it means a great deal to work in partnership with them,” said Tesco meat, fish and poultry director Derek Lawlor (pictured).
The National Pig Association, which has been campaigning for better farmgate pig prices, welcomed Tesco’s new arrangements with pig farmers. “Creating this direct relationship with its pig farmers will bring an unprecedented level of transparency to the pricing of pigs and pork from farm to fork,” said NPA chairman Richard Longthorp.
On the beef side, Tesco will work with about 1,000 farmers, who supply the chain with beef for its Finest range from Aberdeen Angus cattle and who will receive a premium of 40p/kg over the published average market price.
NFU president Peter Kendall said Tesco’s move to direct contracts on pork and beef was laudable. “We believe that these arrangements will foster stronger relationships with the farmers involved and ensure that Tesco is able to provide a consistent product for consumers,” he added.
Tesco said its new direct contracts would affect about 10% of all pork and beef farms in the UK, and farmers in both groups would be required to rear animals to Tesco’s animal welfare standards.